Wichita eagle. [volume] (Wichita, Kan.) 1886-1890, 1887-11-11
RAILROAD MATTERS.
A Big Suit Decided.
Q Use Us.
Topeka Capital.

Big Suit Decided.
Topeka Capital.
A case was decided in the supreme
court yesterday which involved So, SO4.
! 600. 95-the largest amount ever involved
in case tried in the supreme court of
| this state. 1t is a controversy of unusual
interest and of very great Importance,
and the decision of the court was awaited
very anxiously, not only by the parties
in the controversy. but by railroads in all
parts of the country. There is involved,
besides an enormous sum of money,
many fine points in railroad law. The
case is entitled the St. Louis, Fl. Scott &
! Wichita railroad VS.. Francis Herman.
Mr.. Tiernan is at present mayor
of Fort Scott. and is quite we'll
known in Kansas. The decision of the
court below was affirmed by the supreme
court, the decision being against the rail
road company 1t is a suit by Mr.. Tier
nan against the railroad company for
salary claimed to be due him as its gen
eral manager for the years 1890 to 1884;
he also being. part of the time, president,
and part of the time vice president of the
/ company The salary was at the rate of
! $1,000 year, and the first two years
was evidenced by note of $4,000, at 10
per cent. from its date-March 10, 1882.
| The other Two years, upon which plain
tiff admitted credits to the amount of
! $4,500.95, leaving q balance due him
upon account Of S5,399.05, with per
cent interest from March 7, 1884. The
railroad company denied the execution
of the note under oath: denied the pay
ments on account claimed these pay
ments We're made without authority by
officers of the company, and asked iudg
ment for the amount. and then set up
counter claim for the modest sum of 3d.
S04. 600.95, which it was claimed the
plaintiff had wrongfully obtained of the
funds of the company In breach of his
tiduciary relations as one OF its directors,
in the sale of a railroad bed or grade
once owned by the Fort Scott, Humboldt
& Westera railroad company, now de-
funct, to the st. Louis, Fort Scott &
Wichita.
The reason for denying the execution
OF the note was because no formal resO-
luton appeared upon the minutes of the
board of directors of the railroad COM
pany authorizing the giving Of the note:
but parole evidence of this authority was
offered and admitted. =
The main contention was over the
claim made by the railroad as to the al
legged fraud of Tiernan in the sale of
what is known as the Humboldt road
bed to the ST. Louis Fort Scott &
Wichita. In January, 1890, NJ.
S. Carter, Of st. Louis, was
the owner of a railroad bed graded
and constructed westward from Fort
Scott to Humboldt. by a company
known as the Fort Scott, Humboldt &
Western. On February1 II, Tier1ian and
A. w Ayers entered into a contract
with Garter for the purchase of the road
bed in their own names for the sum of
$4,000. In January preceding, Tiernan,
Ayers. Bronson and others associated
with them had become the promoters of
the St Louis. Fl Scott q Wichita Rail
road company. Tiernan and Ayers hav-
ing signed The articles of incorporation on
January 20. In February, 1880. the
charter was filed with the secretary of
state and the company became duly or
ganized. Its purpose was to build
and operate a railroad from the
eastern line Of the state near
Fort Scott, in. westerly direc-
ton. through the counties OF Bourbon.
Sedgwick, TO Kingman, in Kingman
named for the first year. among whom
Bronson. j. D. Hill and others. At the
Tiernan was elected president. A. VI. !
secretary In May following Herman |
and Ayers entered into an agreement /
with the directors Of the railroad com |
10 col To hn ha
at the sum of $500 600 cash or bonds. 7
and S3.600:000 of the capital stock of the /
company. This sale and the terms there /
of were afterwards, in November. at |
meeting of the directors, formally rati- |
fed and approved, and appears in |
full on the records of the company. |
The purchase was afterwards ap-
proved-March 4. 1eS1-at meeting of /
the stockholders by unanimous vote, and /
a deed of conveyance was made and de- |
livered by parties to the railroad for road |
bed. Al the time of the sale there were /
no stockholders. and the s.. 900 900 issued /
under the purchase was all that had been |
subscribed or issued. and the only assets |
of the company was its charter and this /
roadbed. The stock was issued. and the |
company. having no money or bonds. 1
finally issued lis notes for 5000. 600. of /
which S120.eo0 have been paid, and this /
suit is brought on the remaining so. 600. /
1t appears from the evidence that |
the roadbed originally cost about /
SEQ. 600 1t had no marketable value /
only as it could be used for the pur- !
pose for which il was made. II also ap-
pears from the evidence that the stock /.
and notes Of the railroad company at the /
time they were issued. had no present
marketable ra1ue The value of the
property sold as well as consideration
paid-stock and notes-depended very
largely upon the success of the enter
prise.
The contentious OF the railroad COM /
pany were that Herman was president.
general manager and chairman Of the
executive committee OF the railroad, and
that his associates could not legally vote
him salary: that the company Is en-
titled to recover from Tiernan the differ
enoe between the price paid by him fog
the road bed and that al which they sold
il TO the cempany-